The Startup Valu

Expressing Your Val

Implied V
We are raising $150,000
In exchange for 15%

Raise Amount
$150,000
÷
Investor Equity Ownership %: 0.15
=
Implied Post-Money Valuation: $1,000,000
−
Raise Amount: $150,000
=
Implied pre-money valuation: $850,000

This is a companion sheet to the Founder's Pocket

http://1x1media.com/fo

© 2016 1x1 Media, LLC

www.1x1media.com
e Startup Valuation Explorer ™
Expressing Your Valuation To Investors
Implied Valuation
in this round, How you say it -- enter your values in blue...
of the company.

The math...

The post-money valuation you have implied...

The pre-money valuation you have implied...

to the Founder's Pocket Guide: Startup Valuation -- Get the guide here:
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 The Startup V
Expressing You
Impl
We are raising
on a pre-money valuation of:

Resulting in a post-money valuation of:

Raise Amount:

Post-Money Valuation:

You are implying you are willing to

accept a founder dilution of:

This is a companion sheet to the Founder's

http://1x1media

© 2016 1x1 Media, LLC

www.1x1media.com
 The Startup Valuation Explorer ™
Expressing Your Valuation To Investors
Implied Dilution
$ 500,000
How you say it -- enter your values in blue...
$ 1,000,000

$ 1,500,000 The resulting post-money valuation...

$ 500,000
÷ The math -- divide your raise amount by the post-
$ 1,500,000 money...
=
33% The amount of equity your are willing to trade for
the cash investment...

mpanion sheet to the Founder's Pocket Guide: Startup Valuation -- Get the guide here:
http://1x1media.com/founders-pocket-guide/
e here:
 The Startup Valuation Ex
Comp's Valuation Me
Your Startup
Mobile
App discovery
First-time startup founders
Boston, MA
3 paying early adopters
B2B
Early - MVP launched
Personal & F&F: $100,000
Still recruiting
TBD

This is a companion sheet to the Founder's Pocket Guide: Startu

http://1x1media.com/founders-pock

© 2016 1x1 Media, LLC

www.1x1media.com
he Startup Valuation Explorer ™
Comp's Valuation Method
Startup Attributes Comp Startup
Industry Mobile
Niche Search
Founder Experience 1 experienced, 2 new co-founders
Company Location New York, NY
Customer Traction 2 Ad network mid-sized
B2B or B2C B2B
Stage of Development Early - Version 1.2 released
Funding Seed: $250,000
Team Core team onboard
Valuation $2,200,000

eet to the Founder's Pocket Guide: Startup Valuation -- Get the guide here:
http://1x1media.com/founders-pocket-guide/
 The Startup Valuation Explor

Step Up Valuation Metho

Step Up Factor
1. Total market size over $500,000,000
2. Business model scales well
3. Founders have previous exits
4. More than one founder committed full time
5. MVP developed, customer development underway
6. Business model validated by paying customers
7. Significant industry partnerships signed
8. Execution roadmap developed and being achieved
9. IP issued or significant barriers to entry
10. Competitive environment favorable
Total Step Fact

Each "Yes" is wor

Estimated Pre-Money Valuati

This is a companion sheet to the Founder's Pocket Guide: Startu

guide here:
http://1x1media.com/founders-pocket-guid

© 2016 1x1 Media, LLC

www.1x1media.com
 Valuation Explorer ™

Valuation Method

Factor 1 = Yes, 0 = No
000,000 1
1
s 1
mitted full time 1
evelopment underway 1
paying customers 1
hips signed 1
ed and being achieved 1
rs to entry 1
avorable 1
Total Step Factors 10
×
Each "Yes" is worth: $250,000
=
mated Pre-Money Valuation: $2,500,000

under's Pocket Guide: Startup Valuation -- Get the

guide here:
a.com/founders-pocket-guide/
 The Startup Valuation
Risk Mitigation Valuatio
Technology Risk Mitigation
MVP Defined and Implemented $ 50,000 Early product versions define
Prototype Development $ 75,000 For physical products, protot
Technology Optimization $ 50,000 Technology has been develop
IP - Patents, Trademarks, etc. $ 50,000 Patent work has been compl
Certifications and Regulatory Approvals $ 75,000 Any required certifications, li
Detailed Product Roadmap Created $ 15,000 Phases of product developm
$315,000

Market Risk Mitigation

Large Market, Well Defined Niche $ 100,000 Ideal customers defined and
Customer Discovery & Development $ 75,000 Estimate of your progress alo
Business Model Clarity $ 75,000 Do customers understand an
Early Adopter Programs $ 50,000 Do you have customers signe
Channel Partners Signed $ 50,000 Significant channel partners i
Sales Process Established & Repeatable $ 50,000 Defined and documented sal
Marketing Materials and Processes Created $ 75,000 Design and branding establis
Actual Sales Revenue $ 125,000 Actual sales revenue achieve
$ 600,000

Execution Risk Mitigation

Strong Founding Team $ 75,000 Complete founding team onb
Founders Committed Full-time $ 50,000 (discounted value of founder
Previous Startup Experience $ 50,000 Founding team has previous
Previous Exits $ 75,000 (premium you'd have to pay
Detailed Execution Roadmap Created $ 15,000 All phases of the startup have
$265,000

Financial Risk Mitigation

Early Funding $75,000 Actual dollar amounts from e
Detailed Funding Roadmap Created $15,000 Estimate of hours spent hash
Financial Model Created $5,000 Estimate of value of paying e
Founders Sweat Equity
Founder A $ 100,000 Hours invested building the s
Founder B $ 150,000
$345,000
 Total Pre-Money Valuation $1,525,000

Notes and Considerations:

1. Assign a dollar value to to each line item
2. For many line items, the value you assign can be the actual dollars spent to get that
3. Add your own tasks and validations to the list
4. Remember, as you complete each of the task, you are reducing the risk of the start
5. If you don't have an actual value, find proxies for the value of the tasks:
For example, if you had to hire a brand development agency, how much would you

This is a companion sheet to the Founder's Pocket Guide: Startup Valua

http://1x1media.com/founders-pocket-guide

© 2016 1x1 Media, LLC

www.1x1media.com
 up Valuation Explorer ™
gation Valuation Method

arly product versions defined, coded, and tested with users

or physical products, prototypes developed, tested, and shared with potential customers
echnology has been developed with commercialization in mind, beyond proof of concept stage
atent work has been completed, provisional patents filed, trademark filings completed and assigned
ny required certifications, licenses, or other regulatory requirements have been met
hases of product development have been documented, required resources and investments assessed

eal customers defined and market size estimated - large enough to interest investors
stimate of your progress along the Customer discovery roadmap, engagement, interviews, pivots, etc.
o customers understand and adopt your business model - pricing, product delivery, payment terms, traffic metrics valued, etc.
o you have customers signed up with early adopter agreements - value of these agreements
gnificant channel partners identified and singed - brokers, distributers, affiliates, etc.
efined and documented sales process with proven repeatability, at a predictable cost
esign and branding established, web site, SEO, content marketing, demo units, brochures, etc.
ctual sales revenue achieved to date

omplete founding team onboard, or gaps identified with ideal candidates listed
discounted value of founders working day jobs)
ounding team has previous startup and capital raising experience
premium you'd have to pay to get a exit-experienced founder on your team)
l phases of the startup have been outlined - product, branding, team, sales, marketing, funding, etc.

ctual dollar amounts from early investors - founders, friends & Family, early angels, etc.
stimate of hours spent hashing out your funding requirements and plan
stimate of value of paying experienced CFO to build a model

ours invested building the startup, to date estimate

dollars spent to get that task done

cing the risk of the startup and that risk reduction has value
of the tasks:
how much would you spend?

et Guide: Startup Valuation -- Get the guide here:

/founders-pocket-guide/
terms, traffic metrics valued, etc.
 The Startup Valuation Explorer ™
VC Quick Valuation
Funds needed to operate for the next 18 months:

Equity amount VCs want to own:

Your company's post-money valuation is:

Raise amount (18 months):

Pre-money valuation is:

This is a companion sheet to the Founder's Pocket Guide: Startu

Valuation -- Get the guide here:
http://1x1media.com/founders-pocket-guide/

© 2016 1x1 Media, LLC

www.1x1media.com
n Explorer ™
ation
$2,000,000
÷
25%
=
$8,000,000
−
$2,000,000
=
$6,000,000

's Pocket Guide: Startup

e here:
pocket-guide/
 The Startup Valuation Explorer ™

Traditional VC Method
Exit Year Revenue:

Industry Exit Multiplier:

Exit Value (in exit year):

Investor Desired Return Multiple:

Post-Money Value (Now):

Investment Raise Amount:

Pre-Money Valuation (now):

Investor Equity Ownership %:

This is a companion sheet to the Founder's Pocket Guide:

Startup Valuation -- Get the guide here:
http://1x1media.com/founders-pocket-guide/

© 2016 1x1 Media, LLC

www.1x1media.com
tion Explorer ™

C Method
$ 20,000,000
×
2
=
$40,000,000
÷
20
=
$ 2,000,000
−
$500,000
=
$1,500,000

25%

Founder's Pocket Guide:

t the guide here:
nders-pocket-guide/
 The Startup Valuation
True Pre-Money V
Negotiated pre-money valuation: $2,000,000
+
Investment amount: $500,000
=
Post-money valuation: $2,500,000

Apparent investor ownership %: 20%

Option pool percentage: 10%

×
Negotiated pre-money: $2,000,000
=
Dollar value of the option pool: $200,000

Negotiated pre-money valuation: $2,000,000

−
Dollar value of the option pool: $200,000
=
True Pre-Money Valuation: $1,800,000

Investment amount: $500,000

÷
True post-money: $2,300,000
=
True Investor Ownership %: 21.7%

This is a companion sheet to the Founder's Pocket G

 http://1x1media.com/founders-
© 2016 1x1 Media, LLC
www.1x1media.com
 p Valuation Explorer ™
re-Money Valuation

Enter the investment deal parameters (in blue)...

The Investor term sheet dictates that an option

pool be created as a percentage of the pre-
money.

Enter the % to see the dollar value of the option

pool.

Calculate the true pre-money valuation by

subtracting the option pool value.

Now, re-calculate the investor's ownership %

with the option pool considered.

Founder's Pocket Guide: Startup Valuation -- Get the guide here:

edia.com/founders-pocket-guide/